YOUR COMPANY IS LOOKING FOR CANDIAN BUSINESS FINANCING SOLUTIONS
FINANCING FOR BUSINESS IN CANADA
You've arrived at the right address! Welcome to 7 Park Avenue Financial
Financing & Cash flow are the most significant issues facing business today.
ARE YOU UNAWARE OR DISSATISFIED WITH YOUR CURRENT BUSINESS FINANCING OPTIONS?
CONTACT US
CALL NOW - DIRECT LINE - 416 319 5769 - Let's talk or arrange a meeting to discuss your needs
EMAIL - sprokop@7parkavenuefinancial.com
7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Oakville, Ontario
L6J 7J8
Business Financing Options
Business finance options and solutions often involve either borrowing to take on new debt or monetizing assets.
Business Financing will take on one of these two forms to achieve the financing solution that your company needs. But is it better to borrow or monetize? Let's dig in.
Breaking Free from Business Finance Barriers
The challenge of securing adequate business financing keeps many Canadian entrepreneurs awake at night. Rising interest rates, stringent lending requirements, and complex application processes create frustrating barriers to growth.
Let the 7 Park Avenue Financial team show you how companies can unlock opportunities that align perfectly with their specific needs and goals by understanding the diverse business financing options available today via traditional lending institutions and alternative finance firms.
3 Uncommon Takes on Canadian Business Financing Solutions:
- Alternative finance options often provide faster approval than traditional loans, but counter-intuitively, their higher interest rates can result in better long-term profitability through quicker access to market opportunities.
- The rise of AI-driven lending platforms makes it easier, via eligibility criteria, for businesses with non-traditional revenue models to access financing based on real-time performance data rather than historical statements.
- Supply chain financing is becoming increasingly viable for Canadian businesses looking to optimize working capital while strengthening relationships with key suppliers.
THE FUNDING GAP FOR SMALLER SUMS HURTS THE GROWTH OF CANADA’S MID-SIZED FIRMS. REPORT FINDS - FINANCIAL POST -
A report by the Financial Post highlights the financing challenges faced by mid-sized firms in Canada when accessing funding for smaller sums.
These firms often find themselves in a difficult position, with limited financing options.
This funding gap can significantly hinder their growth and development, impacting their ability to scale operations, invest in new technologies, or expand their market reach. The report underscores the importance of addressing this issue, as mid-sized firms are often the backbone of the business community and play a crucial role in the overall economy.
By finding ways to bridge this funding gap, we can support the growth and success of these vital businesses.
It is no secret to our team here at 7 Park Avenue Financial regarding the headline in one of Canada's leading business newspapers.
The article advises that this was the commission of the findings by the federal government. Other key findings in the article
Small businesses, as well as new businesses, have few financing options.
The Canadian market is more conservative.
The cost of capital is higher in this tier of business
The burden of producing higher-quality financial statements
The 'Covid' factor
Growth capital has improved - but not spread out equally!
Sector-based businesses - is your industry ' out of favour'?
WHAT TYPE OF BUSINESS FINANCE SOLUTION IS NEEDED? IDENTIFYING WAYS TO FINANCE YOUR BUSINESS
Identifying the correct type of small business loan financing your company needs, especially for a start-up, will always keep you on top of staying competitive and successful and, in the extreme, avoiding business failure.
It comes down to knowing which solutions & financing options make sense for your firm and your industry (some do not). The comfort of knowing you have access to cash flow and capital can only be described as a good feeling!
SMB FIRMS HAVE LESS CHOICES THAN LARGER CORPORATIONS
Small and medium-sized businesses (SMBs) in Canada face unique challenges when it comes to securing financing.
Unlike larger corporations, SMBs often lack the collateral and credit history traditional lenders require, making accessing the funding they need challenging.
This limited access to financing options can stifle their growth and limit their ability to compete in the market. Additionally, SMBs may not have the same level of negotiating power as larger corporations, which can further restrict their ability to secure favourable financing terms.
Understanding these challenges is crucial for SMBs navigating the complex business financing landscape.
SMALL BUSINESSES HAVE LESS CHOICES THAN LARGER CORPORATIONS
Companies in the SME COMMERCIAL (small to medium enterprise) sector generally have fewer choices than larger corporations or firms with a publicly listed status.
Financing a startup is an even more significant challenge in the current economic environment.
IDENTIFYING CASH SHORTFALLS
So, how does the business owner/financial manager avoid a cash flow shortfall? Due diligence is crucial in evaluating potential investments and ensuring informed decision-making before committing to financial dealings.
And we’re not talking about friends and family, angel investors, or venture capital borrowing! It boils down to a simple piece of thinking: knowing your asset-based and how it’s monetized and understanding the timing of inflows and outflows of small businesses in Canada. Easier said than done, right?
UNDERSTANDING THE STATEMENTS OF CASH FLOWS IN YOUR FINANCIAL STATEMENTS - WHERE GOT/GONE!
One of the great ironies in business lies on page 3 of your business financial statement.
It's the cash flow statement, and when properly understood, it allows the owner/manager to identify why the firm is having problems even when sales are proliferating. Your accountant advises that ( paper ) profits are being generated.
CANADIAN BUSINESS FINANCING SOLUTIONS
Asset monetizing solutions from Canadian finance companies/banks and credit unions such as:
Canadian chartered bank loan credit facilities/business loan
Receivable Financing/factoring line of credit / Confidential Receivable Financing
Inventory Financing
PO/Contract financing
For non-bank asset-based lines of credit, click here for more info on ABL lines.
SR&ED Tax credit financing
Those are ‘ asset monetization’ strategies that will increase operating cash flow. They come at different costs and work differently, but they all solve the same problem.
These solutions can also finance essential investments, such as intellectual property, which can be crucial for business growth.
TERM LOANS AND ACQUIRING DEBT
For business owners, taking on debt to fix the cash flow problem might entail considering a working capital term loan.
That strategy should be carefully considered because it has fixed payments and adds debt to the balance sheet, changing what the Bay St boys call your ' capital structure.'
TWO KEY POINTS IN THE BUSINESS FINANCE OPTION CONSIDERATION
The key point we are making essentially is that your business funding options boil down to understanding:
Working Capital
Cash Flow
Your working capital accounts, i.e. accounts and inventory, can be used to generate business cash in small business financing. The more assets you have, the more access to capital you will almost always have.
On the other hand, cash flow is simply the timing of profits generated over some time.
CONSIDER THESE DEBT OPTIONS
That allows you to consider adding debt options such as:
Lease financing
Term loans
Bridge Loans
Sale Leasebacks
CAN INTERNAL ASSET TURNOVER MANAGEMENT BE THE SOLUTION TO YOUR FUNDING CHALLENGE?
Unfortunately, no one has arrived to warn you about future financing needs in business loans.
Along the way, the owner /manager can address some issues internally—tighten credit terms, manage payables, focus on better asset turnover of a/r and a/p, etc.
BE PREPARED IN YOUR LOAN APPLICATION
If required, be prepared to present reasonable cash flow projections and a business plan that correctly defines your business and its growth and profit potential. 7 Park Avenue Financial business plans meet and exceed bank commercial and alternative lender requirements.
CASE STUDY - THE BENEFITS OF FINANCE OPTIONS
A Canadian precision parts manufacturer in Ontario had served the automotive sector for 15 years with annual revenues of $5M. When two major electric vehicle manufacturers approached them with substantial contracts worth $12M annually, they faced a critical decision. The opportunity required expanding their production capacity by 60% and establishing facilities in two new markets, but their existing capital structure couldn't support the $750,000 investment needed.
The Challenge:
- Immediate need for $500,000 in new manufacturing equipment
- Required $250,000 in working capital for operations expansion
- Traditional bank loan timeline (6-8 weeks) would risk losing contracts
- Desire to maintain 100% ownership and avoid equity dilution
- Need to preserve existing cash flow during expansion
Strategic Financing Solution: Working with 7 Park Avenue Financial the firm implemented a two-pronged financing strategy:
- Equipment Financing ($500,000):
- 5-year term at competitive rates
- Equipment served as collateral
- Fixed monthly payments for easy budgeting
- Tax-deductible interest
- Preserved working capital
- 48-hour approval process
- Working Capital Line of Credit ($250,000):
- Flexible draw schedule
- Interest only on used portions
- Revenue-based repayment structure
- No fixed monthly payments
- Scalable with business growth
- 72-hour approval process
Implementation:
- Day 1: Application submission and initial assessment
- Day 2: Equipment financing approved
- Day 3: Working capital line of credit approved
- Day 4: Documentation completion
- Day 5: Funds disbursed
Immediate Benefits:
- Maintained 100% ownership
- Protected existing cash reserves
- Secured both contracts
- Started immediate equipment procurement
- Began facility expansion planning
6-Month Results:
- Revenue increased 40% from $5M to $7M annually
- Successfully established operations in two new markets
- Created 15 new jobs
- Increased production capacity by 60%
- Improved gross margins by 12% due to economies of scale
- Reduced per-unit production costs by 15%
12-Month Projections:
- On track for $12M annual revenue
- Expected to hire 10 additional staff
- Planning further expansion into US markets
- Considering additional equipment financing for automation
- Projecting 25% increase in profit margins
KEY TAKEAWAYS
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Understanding credit requirements forms the foundation of successful financing applications, enabling businesses to target appropriate lenders.
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Cash flow analysis determines qualification potential and optimal financing structures, ensuring sustainable repayment terms.
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Collateral evaluation impacts available options significantly, with secured financing typically offering better rates and terms.
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Documentation preparation accelerates approval, increasing success rates across all financing types.
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Industry-specific financing knowledge helps businesses leverage specialized programs designed for their sector.
ALTERNATIVE FINANCING OPTIONS
In addition to traditional financing options, SMBs in Canada have access to various alternative financing options.
These non-traditional solutions can provide the necessary funding for businesses that may not qualify for conventional loans or lines of credit. Exploring these options can open up new avenues for growth and development.
EXPLORING NON-TRADITIONAL FINANCING SOLUTIONS
Some alternative financing options for SMBs in Canada include:
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Invoice Financing: This option allows SMBs to access funding based on their outstanding invoices. Businesses can quickly improve their cash flow without taking on additional debt by selling their receivables to a financial institution.
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Asset-Based Lending: Asset-based lending allows SMBs to secure funding based on the value of their assets, such as inventory, equipment, or real estate. This type of financing can be beneficial for businesses with significant tangible assets.
By carefully considering these alternative financing options, SMBs can find the right solution to meet their unique needs and drive their business forward.
CONCLUSION
Want to be ' cleared to go ' for solutions for small businesses, such as monetizing your assets or taking on new debt, either traditionally or with alternative finance solutions?
Call 7 Park Avenue Financial, a trusted, credible, experienced Canadian business financing advisor who can assist you with different types of business finance options. Short-term and permanent long-term solutions are available in financing options for small businesses you may not have considered.
FAQ
What types of business finance solutions are available for Canadian companies?
Business financing includes traditional bank loans, lines of credit, equipment financing, merchant cash advances, invoice factoring, government grants, and alternative lending solutions.
How quickly can I secure business financing?
Approval times vary from the same day for certain alternative lenders to several weeks for traditional bank loans, depending on the financing type and required documentation.
What credit score is needed for business financing?
Credit requirements vary by lender and financing type. Traditional banks typically require scores of 680+, while alternative lenders may approve scores as low as 550 for certain products.
What makes alternative business financing advantageous?
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Faster approval processes
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More flexible qualification criteria
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Multiple funding options available
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Less emphasis on personal credit
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Customizable repayment terms
How does equipment financing benefit growing businesses?
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Preserves working capital
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Tax-deductible interest payments
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Fixed monthly payments for budgeting
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Potential Section 179 tax benefits
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Enables immediate equipment acquisition
What advantages do working capital solutions offer?
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Quick access to operating funds
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Flexible use of capital
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Seasonal business accommodation
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No fixed asset requirements
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Scalable funding options
Why consider invoice factoring for business growth?
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Immediate cash flow improvement
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No debt on balance sheet
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Credit insurance included
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Professional collections service
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Scales with business growth
How do merchant cash advances support business operations?
What documentation is typically required for business financing?
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Business tax returns
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Financial statements
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Bank statements
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Business plan
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Personal credit report
How long does the average financing approval take?
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Traditional banks: 2-8 weeks
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Alternative lenders: 1-5 days
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Equipment financing: 2-7 days
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Government loans : 4-12 weeks
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Online lenders: Same day to 72 hours
What factors affect business financing rates?
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Business credit score
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Time in business
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Annual revenue
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Industry type
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Collateral availability
Which industries qualify for specialized financing?
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Manufacturing
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Healthcare
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Technology
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Transportation
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Construction
What are common financing application mistakes?
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Incomplete documentation
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Unrealistic projections
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Poor credit explanation
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Insufficient collateral
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Limited business history
How do different financing options impact cash flow?
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Traditional loans offer predictable payments
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Line of credit provides flexible draws
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Revenue-based financing adjusts with sales
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Equipment loans match asset lifecycle
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Working capital loans support operations
What security requirements exist for various funding types?
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Bank loans typically require hard assets
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Alternative lending may need personal guarantees
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Equipment serves as collateral for specific financing
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Invoice factoring uses receivables
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Unsecured options available with strong credit
Which financing option best suits rapid growth needs?
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Revenue-based financing scales automatically
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Line of credit offers immediate access
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Equipment financing preserves working capital
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Invoice factoring grows with sales
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Bridge loans support quick opportunities
What is equity financing?
Equity financing is a powerful tool for SMBs looking to raise capital without taking on additional debt. In this type of financing, investors provide funds in exchange for ownership or equity interest in the business. This can be particularly beneficial for SMBs, as it allows them to access the necessary capital to grow and expand without the burden of monthly payments or increased debt on their balance sheet. Equity financing can also bring valuable expertise and connections from investors, further aiding the business’s growth and success.
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Venture Capital: In exchange for equity, venture capital firms invest in SMBs with high growth potential. This type of financing is ideal for businesses in the early stages of development that require significant capital to scale quickly.
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Angel Investors: Angel investors are generally wealthy individuals who provide capital to SMBs in exchange for equity. These investors often bring valuable industry experience and mentorship to the table.
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Crowdfunding: Crowdfunding platforms allow SMBs to raise funds from many people, typically in exchange for equity or rewards. This method can be an effective way to generate capital while building a community of supporters.
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Private Equity: Private equity firms invest in SMBs intending to sell the business for a profit eventually. This type of financing can provide substantial capital and strategic guidance to help businesses achieve their growth objectives.
By exploring these equity financing options, SMBs can find the right fit for their needs and goals.
